Employment Agreement - Immersion Inc. and Bob O'Malley
IMMERSION, INC
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and
between Immersion, Inc., a Delaware corporation (the "Company) and Bob O'Malley
(the "Employee"), effective as of November 5, 2001 (the "Effective Date).
RECITALS
1. The Employee is and has been employed by the Company and is currently the
Company's Chairman and CEO.
2. The Company and the Employee are parties to an employment letter
agreement dated October 14, 2000, (the "Letter Agreement").
3. The Company and the Employee wish to amend and restate the Letter
Agreement in the form of this Agreement, effective as of the Effective Date.
4. Certain capitalized terms used in this Agreement are defined in Section 8
below.
AGREEMENT
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of the Employee by the Company, the
parties agree as follows:
1. POSITION AND RESPONSIBILITIES The Company shall employ the Employee in
the position of Chairman and CEO, reporting solely to the Company's Board of
Directors and assuming and discharging such responsibilities as are commensurate
with such position. The Employee shall comply with and be bound by the Company's
operating policies, procedures and practices from time to time in effect during
his employment. During the Employee's employment with the Company, the Employee
shall devote his full time, skill and attention to his duties and
responsibilities, and shall perform them faithfully, diligently and competently,
and the Employee shall use his best efforts to further the Company's business.
2. TERM OF EMPLOYMENT This Agreement shall become effective as of the
Effective Date, and shall supersede and replace the Letter Agreement, which
shall be void and of no further effect. This Agreement and the Employee's
employment with the Company shall continue until terminated by reason of the
Employee's death or by either party at any time, with or without notice, for any
or no reason. The parties agree and acknowledge that this Agreement is an "at
will" agreement and that no implied covenant or standard of practice will cause
this Agreement to have any minimum period of employment.
3. BASE COMPENSATION For all services to be rendered by the Employee to the
Company while this Agreement is in effect, the Employee shall receive a minimum
annual base salary of $250,000, payable in accordance with the Company's
standard payroll practices. Currently the Employee's salary is reduced as a
result of a company-wide salary reduction
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program. The Employee's base salary shall be reviewed at least annually by the
Company's Board of Directors. The annual base salary specified in this Section
3, as such base salary may be increased during the term of this Agreement, is
referred to herein as "Base Compensation."
4. ANNUAL INCENTIVE For each fiscal year during the term of this Agreement,
the Employee shall be eligible to receive additional cash compensation ("Annual
Incentive") under the Company's annual variable compensation plan based upon
specific financial and/or other targets approved by the Company's Board of
Directors (the "Board"). Unless the Company determines otherwise, the Employee's
Annual Incentive shall be an amount equal to a predetermined percentage of his
Base Compensation. Any Annual Incentive compensation that becomes payable to the
Employee shall be paid in accordance with the Company's standard practices and
policies.
5. OTHER BENEFITS The Employee shall be entitled to participate in the
employee benefit plans and programs that the Company makes available to its
senior executives, subject to the rules and the regulations applicable thereto.
The Company reserves the right to cancel or change the benefit plans and
programs it offers to its senior executives at any time. The Employee will be
eligible for vacation and sick leave in accordance with the policies in effect
for senior executives during the term of this Agreement. The Company shall
reimburse the Employee for all reasonable expenses actually incurred or paid by
the Employee in the performance of his services on behalf of the Company,
subject to and in accordance with the Company's expense reimbursement policy as
from time to time in effect.
6. TERMINATION OF EMPLOYMENT
(a) TERMINATION WITHOUT CAUSE OR FOR CONSTRUCTIVE REASON If the
Company terminates the Employee's employment other than for "Cause," or if the
Employee terminates his employment for a "Constructive Reason" (as those terms
are defined in Section 8), then, in addition to any other amounts to which the
Employee is entitled: (i) the Company shall continue to pay the Employee his
Base Compensation for a period of twelve (12) months after the termination date;
(ii) the Company shall continue to provide the Employee with the same health,
dental and vision benefits as provided to the Employee immediately prior to such
termination or the after-tax cash equivalent, (provided that such amount is
sufficient for the Employee to purchase his own policy), for so long as the
Employee is entitled to continuation of Base Compensation as provided herein,
provided that such coverage shall become secondary if the Employee receives
coverage from a subsequent employer, (iii) the Company shall pay to the Employee
all amounts of unpaid Base Compensation and prorate any earned but unpaid Annual
Incentive, reimburse all reasonable business-related expenses and pay all other
benefits required by law or by the terms of the applicable plan or benefit
program, and (iv) except as otherwise provided under Section 7(a) below with
respect to a termination in connection with a Change of Control, the Employee
shall immediately vest an additional seventy-five percent (75%) of his then
unvested Company stock and Company stock options. All options and grants, to the
extent unexercised and exercisable by the Employee on the date on which the
Employee's Service is terminated, may be exercised by the Employee within six
(6) months (or such other longer period of time as determined by the Board, in
its sole discretion) after the date on which the Employee's Service terminated,
but in any event no later than the Option Expiration Date.
(b) TERMINATION AS A RESULT OF DEATH; DISABILITY In the event of the
Employee's death or by reason of the Employee's "Disability," (as such terms are
defined in Section 8),
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during the term of this Agreement, then (i) the Company shall pay the Employee
or to the representative of the Employee's estate all amounts of unpaid Base
Compensation and any earned but unpaid Annual Incentive, reimburse all
reasonable business-related expenses and pay all other benefits required by law
or by the terms of the applicable plan or benefit program, (ii) 24 months of the
Employee's then unvested Company stock and Company stock options shall vest, and
(iii) in the event of disability, the Company shall continue to pay the Employee
his Base Compensation for a period of six (6) months after the termination date,
less any disability payments made by the Company or its insurance carriers. All
options, to the extent unexercised and exercisable on the date on which the
Employee's Service is terminated, may be exercised by the Employee's guardian or
legal representative at any time prior to the expiration of 12 months after the
date on which the Employee's Service terminated, but in any event no later than
the Option Expiration Date.
(c) VOLUNTARY TERMINATION; TERMINATION FOR CAUSE In the event the
Employee's employment with the Company terminates either (i) voluntarily by the
Employee without a "Constructive Reason," (ii) involuntarily by the Company for
"Cause," then the Company shall have no further obligations hereunder except to
pay to the Employee all amounts of unpaid Base Compensation and any earned but
unpaid Annual Incentive, reimburse all reasonable business-related expenses and
pay all other benefits required by law or by the terms of the applicable plan or
benefit program.
7. CHANGE OF CONTROL
(a) ACCELERATED VESTING Upon a "Change of Control" (as defined in
Section 8), the Employee shall immediately vest in full (100%) of his then
unvested Company stock and Company stock options (i.e., the Company's repurchase
right shall lapse (in the case of unvested stock) and the options shall
immediately become exercisable as to one-half of each remaining vesting
installment). Notwithstanding the forgoing, in the event (i) the Company
terminates the Employee's employment other than for Cause, or (ii) the Employee
terminates his employment for a Constructive Reason, in either case during the
period beginning three (3) months prior to a Change of Control, then upon such
termination the Employee shall vest in full as to his then unvested Company
stock and Company stock options.
8. DEFINITIONS For purposes of this Agreement, the following terms shall
have the following meanings:
(a) CAUSE "Cause" means: (i) the Employee's willful and repeated
failure to comply with the lawful written direction of the Board; (ii) the
Employee's gross negligence or willful misconduct in the performance his duties;
or (iii) the conviction of or entry of a plea of nolo contendre or guilty to a
felony or a crime causing demonstrable material harm to the Company.
(b) CHANGE OF CONTROL "Change of Control" means:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) becomes the "beneficial owner"
(as defined in Rule 13d-3 under said Act), directly or indirectly, of securities
of the Company representing fifty
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percent (50%) or more of the total voting power represented by the Company's
then outstanding voting securities; or
(ii) A change in the composition of the Board occurring within a
three-year period, as a result of which fewer than a majority of the directors
are "Incumbent Directors." "Incumbent Directors" shall mean directors who either
(A) are directors of the Company as of February 1, 2002, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors of the Company); or
(iii) The consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity (or parent
thereof)) at least sixty percent (60%) of the total voting power represented by
the voting securities of the Company or such surviving entity (or parent)
outstanding immediately after such merger or consolidation; provided, however,
that any person who acquired securities of the Company prior to the occurrence
of a merger or consolidation in contemplation of such transaction, and who after
such transaction possesses direct or indirect beneficial ownership of at least
ten percent (10%) of the securities of the Company or the surviving entity (or
parent) immediately following such transaction, shall not be included in the
group of shareholders of the Company immediately prior to such transaction; or
(iv) The consummation of the sale, lease or other disposition by
the Company of all or substantially all of the Company's assets.
(c) CONSTRUCTIVE REASON "Constructive Reason" means the occurrence of
any one or more of the following without the Employee's prior written consent:
(i) A material adverse change in the Employee's position that causes it to be of
less stature or of less responsibility; provided, however, that if after a
Change of Control the Employee is still the most senior executive of the Company
and the Company continues to operate as an independent subsidiary or independent
controlled affiliate, then no Constructive Reason shall have occurred; (ii) A
change in the position to whom the Employee reports; provided, however, that if
after a Change of Control the Employee reports to the Company's Chief Executive
Officer and the Company continues to operate as an independent subsidiary or
independent controlled affiliate, then no Constructive Reason shall have
occurred; (iii) A reduction of more than fifteen percent (15%) of the Employee's
Base Compensation (the employee agrees that this condition does not apply to the
current company-wide salary reduction program and that the Employee may
voluntarily elect to participate in future salary reduction programs); or (iv)
Relocating the Employee to a facility or location more than thirty (30) miles
from his then current location.
This provision applies only if the Employee elects to terminate
his employment within thirty (30) days after the occurrence of a Constructive
Reason.
(d) DISABILITY "Disability" means that the Employee has been unable
to substantially perform his duties under this Agreement as a result of his
incapacity due to physical or mental illness, and such inability, at least 90
days after its commencement, is determined to be
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total and permanent by a physician selected by the Company or its insurers and
acceptable to the Employee or the Employee's legal representative (such
agreement as to acceptability not to be unreasonably withheld).
9. SUCCESSORS
(a) COMPANY'S SUCCESSORS Any successor, whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise)
to all or substantially all of the Company's business and/or assets shall assume
the obligations under this Agreement and shall perform the obligations under
this Agreement in the same manner and to the same extent as the Company would be
required to perform such obligations in the absence of a succession. Other than
for purposes of Section 8(c) (the definition of "Constructive Reason"), the term
"Company" shall include any such successor to the Company's business and/or
assets.
(b) EMPLOYEE'S SUCCESSORS The terms of this Agreement and all rights
of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, devisees and legatees.
10. NOTICE
(a) MANNER Any notice hereby required or permitted to be given shall
be sufficiently given if in writing and upon mailing by registered or certified
mail, postage prepaid, to either party at the address of such party or such
other address as shall have been designated by written notice by such party to
the other party.
(b) EFFECTIVENESS Any notice or other communication required or
permitted to be given under this Agreement will be deemed given on the day when
delivered in person, or the third business day after the day on which such
notice was mailed in accordance with Section 10(a).
11. GOVERNING LAW This Agreement shall be governed by and construed in
accordance with the internal substantive laws, but not the choice of law rules,
of the state of California.
12. SEVERABILITY The invalidity or unenforceability of any provision of this
Agreement, or any terms hereof, shall not affect the validity or enforceability
of any other provision or term of this Agreement.
13. INTEGRATION Except as otherwise expressly provided herein, this
Agreement, together with the Confidential Information, Invention Assignment and
Arbitration Agreement between the Employee and the Company (the "Confidential
Information Agreement"), represent the entire agreement and understanding
between the parties as to the subject matter herein and supersedes all prior or
contemporaneous agreements, whether written or oral. No waiver, alteration or
modification of any of the provisions of this Agreement shall be binding unless
in writing and signed by duly authorized representatives of the parties hereto.
14. EMPLOYMENT TAXES The payments made pursuant to this Agreement will be
subject to applicable income and employment taxes.
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15. COUNTERPARTS This Agreement may be executed by either of the parties
hereto in one or more counterparts, none of which need contain the signature of
more than one party hereto, and each of which shall be deemed to be an original,
and all of which together shall constitute a single agreement.
16. ARBITRATION Any dispute or controversy arising out of, or relating to,
this Agreement or the Employee's employment or termination thereof shall be
settled by binding arbitration in accordance with the provisions of Section 9 of
the Confidential Information Agreement, which are incorporated by reference
herein.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by a duly authorized officer, as of the Effective Date.
IMMERSION, INC.
By:___________________________________
Title:________________________________
EMPLOYEE
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Bob O'Malley